Insurance Firms Ordered to Pay $5 Million for Quake Education

State Insurance Commissioner Chuck Quackenbush has ordered three insurance companies to contribute $5 million toward earthquake education and repair as part of a settlement related to 1994 Northridge earthquake claims.

The settlement caps the commissioner’s effort to mediate complaints by nearly 3,000 property owners who said insurance companies improperly handled their claims from the magnitude 6.7 quake. Insurance carriers previously paid out $12.5 billion in 630,000 claims related to that quake and contend that the vast majority of customers were satisfied.

State Farm and Allstate insurance companies were ordered to pay $2 million each as part of the settlement, Quackenbush’s office said. Farmers Insurance Group was ordered to pay $1 million.

The money will go toward earthquake safety education in schools, neighborhood and personal earthquake preparedness, quake mitigation and repair and seismic science.

Quackenbush aides could not say how the money would be divided.

The programs were also designed to help increase the responsiveness of insurance companies in disasters, said state officials.

“This focus ensures that Northridge earthquake victims’ needs are met and that everything is being done to reduce the number of victims of any future earthquake here in California,” Quackenbush said in a statement.

The commission had taken earlier action that resulted in Farmers Home Insurance Co. paying $100,000 and Fireman’s Fund giving $555,000 to the programs. 20th Century Insurance also contributed $6 million to a fund to help earthquake victims.

A consumer advocacy group said the settlement sent the right signal to insurance companies to be more responsive to customers. But earthquake education programs should not come at the expense of needy homeowners, said Gail Hillebrand, senior attorney at the Consumers Union, which helped design the state-run mediation program.